At around 3 am Thursday morning on September 15, Ethereum founder Vitalik Buterin announced that ‘The Merge’ was successful.
With this historic event, the Ethereum blockchain, with its billions in NFTs and infrastructure built on top of it, just reduced its energy consumption by 99%.
This also means you’ll probably hear a lot of so-called crypto bros recite the following spiel in the coming weeks:
While I exaggerated a bit on the Visa part (Ethereum could theoretically one day process 10,000+ transactions per second, faster than Visa/Mastercard), all that technical jargon means is that, when an artist, small business owner, or brand sells something on Ethereum, the transaction price is brought down by the more people who hold Ethereum (the stake part of Proof-Of-Stake) and validate the transaction. The system that was previously in place was clunky and environmentally horrific.
Here’s Christopher Moltisanti to explain:
Okay, this time I didn’t exaggerate. The White House really did say that Proof-Of-Work’s annual energy consumption surpassed Australia and Argentina (all to process transactions).
And yes, Visa and MasterCard require energy to process transaction. However, the prices they negotiate with merchants varies; with Ethereum’s Proof-Of-Stake, everyone is encouraged to bring down the cost together by validating one another’s transactions (rather than allowing a complicated math problem to do it), regardless of the merchant’s volume or stature.
A simple way to put it is this: imagine if everyone who has Venmo approved each other’s transactions without needing Venmo, a central authority. In return, instant transfers became cheaper for everyone.
Wait, so NFTs traded on the ETH blockchain are now “environmentally friendly?”
They emit roughly the same CO2 as playing a video game, watching a TV show, or scrolling social media.
That’s still pretty bad, right?
If you’re that concerned, put your phone down and go outside for a bit.
I’ll still never buy an NFT. Why would I pay for a JPEG when I can just download it for free?
Chances are, especially after ETH’s switch to Proof Of Stake, you’ll likely buy NFTs that aren’t advertised as NFTs.
Just like how everyone was gravely concerned about their data being compromised when cloud computing took over in 2008, it’s now an integrated part of how we enjoy Netflix, Instagram, and practically everything else in Web2. ‘The cloud’ has become a welcome inevitability, just like NFTs could eventually be when it comes to digital access.
This shift is coming sooner, rather than later.
On September 12, for instance, Starbucks announced it was integrating NFTs into its existing loyalty program. During New York Fashion Week, Puma’s Black Station offered NFT holders the opportunity to forge real shoes.
With environmental concerns no longer holding brands back, The Merge now means that brands can more freely explore community-building with NFTs, rewarding dedicated fans with experiences.
Take my Hoodlums PFP as an example: it’s a JPEG, yes, but it’s also a token that grants me access to attend Bonnaroo, Governors Ball, or Something In The Water for free.
NFT projects like Hoodlums and Bored Ape Yacht Club have established a consistent precedent for granting NFT-holders IRL experiences. All you need to use is apps like Discord and crypto wallets, which more and more brands are beginning to use.
When you consider Nike made an estimated $1.29 billion from RTFKT NFTs alone (half of which came from royalties), its entry into forging IRL clothes is only the beginning of a scalable operation that may soon see other brands in the family (like Jordan) using NFTs, too.
Plus, to paraphrase gmoney speaking on his 9dcc collection, being able to track the people who owned and wore NFT-associated clothes gives new life to these items, increasing their value on the secondary market.
With brands like Nike, Tiffany, Gucci, Puma, and adidas finding early success with NFTs, it’s likely many of other major brands will start hopping on board too.
The Merge represents a new era for NFTs, one that could usher an era of more deeply interconnected culture.